Hostess/union mediation fails; next stop, liquidation?

The judge tried to avoid the inevitable.

The 82-year-old Hostess runs 33 bakeries, 553 distribution centers, about 5,500 delivery routes and 527 bakery outlet stores throughout the United States. Bakery operations ceased last week, though product deliveries to stores continued in order to sell already-made products.

The company has blamed union wages and pension costs for contributing to its unprofitably. Hostess Chief Executive Gregory Rayburn has also said the company’s labor contracts have deterred would-be bidders for the company and its assets.

Aside from its unionized workforce, analysts, bankers and restructuring experts have said that a fleet of inefficient and out-of-date factories has also eaten up costs. They have said the brand names were likely to be more valuable once they were separated from the factories and sold to non-union competitors.

Bankers have said rivals including Flowers Foods and Mexico’s Grupo Bimbo were very likely to be interested in parts, but not all of, the brands. Neither company could be reached for comment. Private equity firms are also interested.

Sun Capital Partners is interested in bidding for all of Hostess, according to a source familiar with Sun’s plans, and Metropolous & Co is also interested, according to Daren Metropolous, a principal at the firm.

Schadenfreude on November 20, 2012 at 11:42 PM

Let them eat cake

Schadenfreude on November 21, 2012 at 12:10 AM